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Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH, AHMEDABAD
Before: SHRI N.K. BILLAIYA & SHRI MAHAVIR PRASAD
PER N.K. BILLAIYA, ACCOUNTANT MEMBER
With this appeal, the Revenue has challenged correctness of the order of CIT(A), Gandhinagar, Ahmedabad dated 20.02.2014 pertaining to assessment year 2010-11.
Grievance of the Revenue is twofold. Firstly, the Revenue is aggrieved by the deletion of Rs.86,55,134/- being disallowance of 5% of the expenses claimed in trading account and secondly, the Revenue is aggrieved by the deletion of Rs.17,07,145/- on account of unexplained unsecured loans.
Briefly stated facts of the case are that the assessee is a civil contractor whose return was selected for scrutiny assessment. Inspite of several notices, as exhibited on page no.2 of the Assessment Order, the assessee did not comply with the notices. The Assessing Officer sought certain details from the assessee which were not submitted. The Assessing Officer formed a belief that the expenditure claimed by the assessee in its books of account are not proved. The Assessing
ITA No.1420/Ahd/2014 A.Y. 2010-11 Page 2 of 4 Officer further found that there is a fall in the gross profit rate when compared with the profit rate in the immediately preceding assessment year. The Assessing Officer accordingly disallowed 5% of expenses claimed in trading account amounting to Rs.84,09,849/- and another 5% of expenses claimed in Profit & Loss Account amounting to Rs.2,45,285/- thereby making a total disallowance of Rs.86,55,134/-
Proceeding further, the Assessing Officer further noticed that there were new unsecured loan of Rs.17,07,145/-. The Assessing Officer treated the entire amount as unexplained cash credit and made addition under section 68 of the Act.
The assessee assailed the assessment before the CIT(A) and explained that its books of account are audited and it is incorrect to say that the assessee never complied with the requirement of the Assessing Officer. The assessee furnished all the details before the CIT(A). A remand report was called for from the Assessing Officer and counter reply was called for from the assessee. After considering the facts and submissions and the details submitted by the assessee, the CIT(A) observed that the adhoc disallowance made by the Assessing Officer is without any basis and, therefore, not justified. More particularly, when even in the remand proceedings the Assessing Officer has not been able to find and bring on record any discrepancy in the details of evidences furnished. The CIT(A) accordingly directed the Assessing Officer to delete the addition of Rs.86,55,134/-
On examining the cash credits, the CIT(A) found that all the alleged cash creditors are trade creditors of the assessee for whom the assessee has done the contract work or who have supplied labourers to the assessee. Having satisfied with the genuineness of the credit, the CIT(A) deleted the addition of Rs.17,07,145/-
Aggrieved by this, the Revenue is before us. The learned Departmental Representative strongly supported the findings of the Assessing Officer. Per contra, learned counsel for the assessee reiterated what has been stated before the lower authorities.
ITA No.1420/Ahd/2014 A.Y. 2010-11 Page 3 of 4 8. We have given a thoughtful consideration to the orders of the authorities below. It is true that the assessee did not file all the details of expenditure during the course of assessment proceedings. It is equally true that all the necessary details were furnished before the CIT(A) who had called for a remand report from the Assessing Officer. Once the details have been furnished and transmitted to the Assessing Officer, and the same were examined by the CIT(A), we do not find any reason to interfere with the findings of the CIT(A). Ground no.1 is accordingly dismissed.
We find that the additions were made in respect of the following cash creditors:-
S.No. Name, Address & P.A. No. (if Amount Whether Maximum Amount available) taken or squared of amount repayment accepted up or not outstanding (1) Arvindbhai Kantidas Parmar 300,000 Yes 348,000 648,000 Address: N.A., Pan No.:N.A. (2) Chaturbhai M. Raval: Nil No 30,497/- Nil Address: N.A., PAN No.:N.A. (3) Gujarat Laxmi M.K.S.M. Ltd. Nil Yes 500,000 500,000 Address: N.A., PAN No.:N.A. (4) Kanubhai R. Parmar 200,145 Yes 60,000 260,145 Address: N.A., PAN No.:N.A. (5) K.G. Parmar Nil No 40,000 Nil Address: N.A., PAN No.:N.A. (6) Madhuben Arvindbhai Parmar 522,000 Yes 78,000 600,000 Address: N.A., PAN No.:N.A. (7) M.C. Desai Arts & Com. College 500,000 No 500,000 Nil Address: N.A., PAN No.:N.A. (8) Rambhai M. Raval Nil No 202,884 Nil Address: N.A., PAN No.:N.A. (9) Satiskumar S. Chavda Nil No 59,000 Nil Address: N.A., PAN No.:N.A. (10) Vishal Developers Nil No 64,000 Nil Address: N.A., PAN No.:N.A. (11) Zinabhai M. Raval Nil No 231,588 Nil Address: N.A., PAN No.:N.A. (12) Falguniben Parmar Nil No 200,000 Nil Address: N.A., PAN No.:N.A. (13) Ramaben A. Vaghela Nil No 1,965,524 758,004
ITA No.1420/Ahd/2014 A.Y. 2010-11 Page 4 of 4 Address: N.A., PAN No.:N.A. (14) Pratinj Nagarpalika Work 185,000 No 185,000 Nil Address: N.A., PAN No.:N.A.
We have also carefully gone through the copy of ledger account of all the aforementioned creditors. We find that inadvertently the tax auditor has treated the aforementioned persons under the head “unsecured loan” whereas, in fact, all the above persons are “trade creditors” and with whom the assessee has done some contract business including supply of labourers on contractual payments. We find that tax has been deducted at source as per the provisions of law.
On given facts, we do not find this to be a fit case for the additions under section 68 of the Act. The second ground of the Revenue is also dismissed.
In the result, appeal filed by the Revenue is dismissed. (Order pronounced in the open Court on this 13th day of December, 2017)
Sd/- Sd/- Mahavir Prasad N.K. Billaiya (Judicial Member) (Accountant Member) Ahmedabad, the 13th day of December, 2017 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order E COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad